Step through the MetaPortal
A couple of weeks ago, we launched the Metaverse Index (MVI), making it easy for anyone to invest in the trend of entertainment, sports, and business shifting to a virtual environment. We held our launch party in a community-owned casino, inside a virtual world powered by the Ethereum blockchain. We genuinely believe that this is the future. The future of work, future of play, and future of a whole new economy.
What is the metaverse?
So what exactly is the metaverse? Many people tend to think that any virtual world automatically qualifies as part of the metaverse. But that's a bit misleading as virtual worlds and digital experiences themselves are not a new phenomenon. What brings the metaverse to life, in our view, is the intersection of blockchain and virtual reality technologies.
Our favourite definition of the metaverse comes from Enjin, a company building an ecosystem powering virtual economies. In their words:
The "metaverse" is a shared digital space that seamlessly integrates aspects of the real world — specifically things like ownership, identity, and financial value.
While the metaverse may integrate aspects of the real world, it is not constrained by the laws of physics and presents near-infinite possibilities. Just as the internet developed its own culture, over time the metaverse will develop its own societal norms and social consensus. It will have its own economic and financial systems that will allow us to define and communicate value. Perhaps most importantly, it will provide each individual the right to their sovereignty.
Cryptonetworks – protocols on blockchains – are fundamental building blocks of the metaverse. For the most part, projects that form the metaverse as it stands today are being built on the Ethereum blockchain. They are subject to Ethereum's social consensus and values of decentralisation, openness, transparency, and inclusivity. Each project within the metaverse can have its own social norms, but most inherit Ethereum's values at the base level and build on top of them.
Non-fungible tokens (NFTs) are a crucial building block of metaverse architecture. They establish and authenticate true, digital ownership. The potential of NFTs is easily grasped when placed in the context of games like Fornite. Developed by Epic Games, Fortnite generates revenue primarily from selling “skins” and “emotes” – digital clothes and dances – that players can use to signal their status and enhance their experience in the game. However, while players purchase skins, they do not own them. In a parallel world where Fortnite was built on a blockchain, with skins represented by NFTs, players would be the rightful owners of their digital items. This would enable the creation of open and transparent secondary markets that empower gamers around the world. This example can be extended to all kinds of digital goods and property. Jake Brukhman at Coinfund hypothesizes that all digital content – blogs, videos, memes, media – is going on-chain, and we tend to agree.
When it comes to economics, the metaverse is powered by inclusive, user-focused token economic design. The financial system of the metaverse is decentralised and based on code rather than human judgement. This means that the system is inclusive by design. It's the evolution of "don't be evil" to "can't be evil". In the metaverse, there's no regard for your geographic location, race, gender, level of income, etc. Everyone has the same opportunity, and the cost of that opportunity is close to 0. The distribution of value and ownership in the metaverse also differs from the real world. The value created in the metaverse accrues to the developers, users, and players. It directly contrasts the legacy financial system where value accrues and remains locked at the top of the pyramid. We often refer to this as the genesis of the ownership economy.
And, of course, each individual in the metaverse is a sovereign individual. Ethereum is a global utility, a piece of critical public infrastructure that acts as a service provider. Ethereum doesn't impose any rules on those who choose to use it. Individuals have complete control over their business and personal affairs on Ethereum and, by extension, in the metaverse emerging on top of it.
Why is metaverse the future?
We believe that the metaverse represents the future of work, play, and social structures, among many other things. We are also convinced that powered by blockchain and crypto primitives like NFTs, it will disrupt almost every industry.
The future of play and entertainment is reasonably straightforward to grasp. Blockchain games give developers and gamers a much better way to monetise their efforts due to the ownership and financial incentives inherent to the system. Virtual events, like the Travis Scott concert in Fortnite, are increasingly an alternative to real-life events. However, in the metaverse, those entertainment events can be enhanced by designing other virtual experiences around them. You could create a quest at a concert that unlocks a particular badge or perhaps a special edition song issued as an NFT. Because it's an NFT, the individual has full ownership rights to that item and can share it with friends or sell it. The metaverse opens up a whole new frontier when designing experiences, and we expect it to increasingly become a place where we come to play and socialise.
Metaverse as the future of work is a bit harder to see for most people. We encourage you to consider the global implications of a shared digital space that seamlessly integrates aspects of the real world. Decentral Games, for example, is a digital casino operator and has recently employed people for the role of virtual hosts in their establishments. More opportunities like this one will be created in the future. Over recent years, we have seen the emergence of free-to-play games and, more recently, play-to-earn games. Axie Infinity has been recognised as a game that enables players in developing countries – like the Philippines – to make a living playing its blockchain-based game.
The metaverse further opens new virtual doors for creators around the world to monetise their work. The creation of in-game assets, like swords, decorations, etc., can be monetised today through NFTs and game-specific marketplaces. Royalties are now programmable, ensuring that artists and creators realise financial rewards for their work in perpetuity.
To see the metaverse as the future of work, we need to accept that today's definition of work is a legacy, leftover from the industrial revolution at the turn of the 20th century. In recent decades web2 infrastructure and tools like video conferencing, email, and instant messaging have allowed us to coordinate on a global scale. Throughout this period we defined value through the lens of economic output, and while globalisation led to unprecedented growth, it came at a significant cost to society. We believe that economic growth as the primary measure of value is becoming outdated. With public blockchains, we can define other forms of value, and with token-based economies, we can unlock previously dormant resources to facilitate greater value creation. This will change the very definition of work, and we believe it will happen in the metaverse.
In that context, fashion is an interesting example. As we spend more and more time online, our virtual avatars will become the way others perceive us. Our avatars will wear digital items, sneakers and t-shirts, the same way we do in the real world. This will fundamentally disrupt the fashion industry. Creating digital fashion items as NFTs, potentially pairing digital items with physical ones, will become increasingly common. But it can be done by anyone, anywhere in the world. Indeed, this is already happening. MetaFactory - a project that produces “digiphysical goods”, where buyers receive a digital collectible with each physical item - is at the forefront of merging the physical and digital goods. Not only does this blur the lines between digital and physical fashion, but it also decentralises fashion since the project is governed by a community.
As virtual reality technology improves in the future, we can see most of our real-life experiences shifting to the digital realm. We can also see how that would change some of our social structures. How do we interact in a world where identity is no longer defined by sex, race, religion or geography? How does our perception of geography and nation-states change as we spend more and more time in the metaverse? How do we govern the metaverse, and how do we choose the social contracts that underpin it?
Where does MetaPortal come into it?
MetaPortal is a doorway into the metaverse and we invite you to step through it with us. In this newsletter, we will spend some time talking about the individual projects in the Metaverse Index and also share thoughts on macro and high-level developments relating to the metaverse.
Before we launched MVI, we didn't have much time to explore this new frontier and projects within it. We also struggled to find content that would guide us through the macro and the micro, that would explain the trends but also showcase individual projects in the space. We hope that MetaPortal will provide such content to our readers and help them navigate this brave new world.
'We believe that economic growth as the primary measure of value is becoming outdated. With public blockchains, we can define other forms of value, and with token-based economies, we can unlock previously dormant resources to facilitate greater value creation.'
That is really interesting. Can you expand on these other forms of value and how activity in the metaverse might be better measured in ways other than economic growth?